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We’re now much more than halfway through 2025, and it’s turning into a great year for my Self-Invested Personal Pension (SIPP) portfolio. As I type, it’s comfortably ahead of both the FTSE 100 and S&P 500.
This is very encouraging to see because I run a pretty tight ship, with less than 20 stocks in this portfolio. Conversely, if a handful of core holdings don’t do well, my SIPP will probably underperform. This happened dramatically in 2022.
However, most of the shares are up in double digits this year. Below are my five largest SIPP holdings.
| Year-to-date performance | |
|---|---|
| Axon Enterprise | +37% |
| MercadoLibre | +36% |
| Shopify | +40% |
| Uber | +50% |
| Duolingo (NASDAQ:DUOL) | +3% |
Strong quarter
As we can see, shares of language learning platform Duolingo are only up 3%. But they’ve done much better over one year (+80%).
Still, heading into last week’s Q2 earnings report, I was a bit worried. Some analysts had been downgrading the stock because app-tracking data appeared to suggest a slowdown in Duolingo downloads.
Yet the quarterly engagement numbers were strong. Daily active users (DAUs) increased 40% year on year to 47.7m, with paid subscribers rising 37% to 10.9m. This is very impressive given that the firm was lapping 60% growth in DAUs last year (and the year before).
Most Duolingo revenue comes from subscriptions, and the rest from ads. Q2 revenue jumped 41% to $252.3m, while adjusted EBITDA rocketed 64% to $78.7. Those figures were 4.8% and 28.8% higher than analysts were expecting.
CEO Luis von Ahn said: “We believe we’re still early in our user growth journey. We’ve delivered innovation while growing profitability.”
The company now expects full-year bookings to be around $1.15bn (roughly 32% year-on-year growth).
Now, there was a social media backlash after Duolingo announced in March that it was becoming an “AI-first company”. Young people, mainly in the US, saw this as it coldly replacing most human employees with AI.
Management said the proper context was lost in translation. But another PR disaster like this is a risk, as it may lead people to delete the Duolingo app.
Also, new AI-powered rivals could emerge, making improving large language models a double-edged sword.
Should I be nervous?
Another thing I’m mindful about is that many growth stocks I hold are highly valued after their strong runs. A market pullback might be on the cards at some point this year.
Duolingo is trading at 11 times forward sales and 37 times EBITDA (both for 2026). So there’s potential valuation risk if growth suddenly slows.
Taking a five-year view, however, I’m very bullish. Duolingo’s fastest-growing market is China, where 400m English language learners reside. Asia as a whole is the firm’s top growth region.
Duolingo has 128m monthly active users, versus an estimated 2bn people learning languages worldwide. Plus its music, maths and chess courses could be monetised in future.
Additional courses may even see it become a digital education super-app. While not guaranteed, this is an exciting prospect, especially given the firm’s modest $15bn market cap.
For investors with a truly long-term outlook (five-to-10 years), I think the stock is well worth considering, despite the high valuation. I’m going to keep holding this one in my DIY pension long term and expect to ride out any coming stock market volatility.
